- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 26.5%
The Monetary Policy Committee of the Central Bank of Nigeria left the Monetary Policy Rate at 26.5 % on 20 May 2026, judging that the recent, externally induced rise in headline inflation is temporary and that prior reforms have kept the macroeconomic environment sufficiently robust to support a return to disinflation while anchoring expectations. After cutting the MPR by 50 bp in February 2026 and by 50 bp in September 2025, the Committee has now paused, maintaining a cumulative 100 bp easing from 27.5 % a year earlier. It also retained the standing-facilities corridor at +50/-450 bp around the MPR and left cash-reserve requirements unchanged at 45 % for deposit money banks, 16 % for merchant banks and 75 % on non-TSA public deposits. Year-on-year headline inflation edged up to 15.69 % in April from 15.38 % in March as food prices quickened, although core inflation eased to 15.86 %, the 12-month average fell to 19.16 % and monthly price growth decelerated sharply to 2.13 %. Real GDP expanded by 4.07 % y/y in Q4 2025, supported by both industry and agriculture, while the recent completion of a recapitalisation drive has produced 33 better-capitalised banks. Foreign-exchange reserves rose to USD 49.49 bn on 15 May 2026, providing 9.0 months of import cover and underpinning exchange-rate stability. The MPC flagged the Middle East conflict’s upward pressure on global energy costs and noted that many central banks are adopting a data-dependent stance amid higher global inflation. It pledged to remain cautious and vigilant, reaffirming a forward-looking, evidence-based approach to safeguarding price and financial stability.
Rate evolution
From July 2025 to July 2026, the Central Bank of Nigeria eased the Monetary Policy Rate by 100 basis points to 26.5 per cent, moving from an initial hold to cuts interrupted by pauses as disinflation progressed. The shift was driven first by a need to sustain disinflation despite persistent underlying price pressures and global trade and geopolitical uncertainty, then by stronger macroeconomic stability, with falling headline, food and core inflation, exchange rate stability, firmer reserves and capital inflows, improved food supply, moderating Premium Motor Spirit prices and resilient growth creating room to support recovery even as double-digit inflation and excess liquidity kept policy cautious.
After cutting by 50 basis points in February 2026 on a balanced assessment of risks, the Committee held in May as inflation rose for a second month, judging the pickup transitory and linked to Middle East-driven energy and logistics costs, while arguing that tightening, exchange rate stability, reserve buffers, enhanced food supply and banking-system resilience should restore disinflation. It retained the policy rate again in July after headline inflation eased marginally in June, ending three consecutive months of uptick, as renewed hostilities in the Middle East heightened uncertainty and upside risks to inflation through energy prices, even as core inflation moderated on exchange rate stability, reserves increased, policy coordination helped moderate the external shock and banking recapitalisation improved financial-system resilience, leaving policy cautious, vigilant and data-driven.
In September 2026, the Committee reset the Monetary Policy Rate at 23 per cent and recalibrated the Standing Facilities Corridor to 50 basis points above and 300 basis points below the policy rate, describing the measures as an operational realignment rather than a change in stance after divergence between the policy rate and market rates weakened transmission. It judged that three consecutive months of declining headline inflation, robust external reserve buffers, improved external sector fundamentals and stronger investor confidence provided headroom for the reset without undermining disinflation, while flagging prolonged Middle East tensions and election-related spending as upside risks and keeping future decisions data-dependent.